Professional Documents
Culture Documents
G.R. No. 172948. October 5, 2016.*
PHILIPPINE ASSOCIATED SMELTING AND REFINING
CORPORATION, petitioner, vs. PABLITO O. LIM,
MANUEL A. AGCAOILI, and CONSUELO M. PADILLA,
respondents.
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* SECOND DIVISION.
601
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602
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603
LEONEN, J.:
An action for injunction filed by a corporation generally
does not lie to prevent the enforcement by a stockholder of
his or her right to inspection.1
Philippine Associated Smelting and Refining
Corporation filed a Petition for Review on Certiorari2 to
assail the Court of Appeals’ Decision3 dated January 24,
2006 and Resolution4 dated May 18, 2006. The Court of
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1 See Lim v. Court of Appeals, 517 Phil. 522; 482 SCRA 326 (2006) [Per
J. Garcia, Second Division].
2 Rollo, pp. 3286.
3 Id., at pp. 716. The Decision, docketed as C.A.G.R. S.P. No. 88975,
was penned by Associate Justice Juan Q. Enriquez, Jr. and concurred in
by Associate Justices Godardo A. Jacinto and Vicente Q. Roxas of the
Second Division, Court of Appeals, Manila.
4 Id., at pp. 1718. The Resolution was penned by Associate Justice
Juan Q. Enriquez, Jr. and concurred in by Associate Justices Godardo A.
Jacinto and Vicente Q. Roxas of the Second Division, Court of Appeals,
Manila.
604
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5 Id., at pp. 218220. The Order, dated April 14, 2004 and docketed as
SEC Case No. 0433, was penned by Pairing Judge Rodolfo R. Bonifacio of
Branch 158 of the Regional Trial Court, Pasig City.
6 Id., at p. 99.
605
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606
Aggrieved, Lim, Agcaoili, and Padilla filed before the
Court of Appeals a Petition for Certiorari8 questioning the
propriety of the writ of preliminary injunction. The Court of
Appeals held that there was no basis to issue an injunctive
writ, thus:
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The Order of the RTC shows that indeed there is no basis for
the issuance not only of the temporary but also of the permanent
injunctive writ. The Order dated April 14, 2004 states:
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607
Hence, Philippine Associated Smelting and Refining
Corporation filed this Petition praying that this Court
render judgment:
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acts which are bases for the application of the writ of preliminary
injunction.10
In the Resolution11 dated July 19, 2006, this Court
denied petitioner’s prayer for the issuance of a temporary
restraining
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608
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609
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23 Id., at p. 559.
24 Id.
25 Id., at p. 560.
26 Id., at p. 561.
27 Id., at p. 68.
28 A.M. No. 01204SC (2001).
29 Rollo, p. 71.
30 Id., at p. 73.
610
What precisely is contemplated by the phrase “gaming
access to records” is not clear.
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611
Petitioner claims that respondents are materially and
substantially invading its right to protect itself by
demanding to inspect petitioner’s purportedly confidential
records. Respondents wrote petitioner and demanded to
inspect its corporate books and records.34 They reiterated
this demand in a subsequent letter.35
On at least two (2) occasions, respondents went to
petitioner’s office to again demand that they be allowed to
inspect.36 On one of these occasions, respondents brought
members of the press, caused work disruption, and
harassed petitioner’s representatives who met with
them.37 When asked the purpose of the inspection of
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33 Id., at p. 84.
34 Id., at p. 523.
35 Id.
36 Id., at p. 524.
37 Id.
38 Id., at p. 525.
612
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39 Id.
40 Id.
41 Id., at pp. 118145.
42 Id., at pp. 151154.
43 Id., at p. 527.
44 Id., at p. 51.
45 The criminal case, entitled People of the Philippines v. Javier
Herrero and Jocelyn I. SanchezSalazar and docketed as Criminal Case
No. 76718, was eventually dismissed.
46 Rollo, p. 528.
613
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47 Id., at p. 529.
48 Id.
49 Id., at p. 530.
50 Id.
51 Id.
52 Supra note 1 at p. 527; p. 331.
614
RULE 58
PRELIMINARY INJUNCTION
....
SEC. 3. Grounds for issuance of preliminary injunction.—A
preliminary injunction may be granted when it is established:
In Duvaz Corp. v. Export and Industry Bank:53
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53 551 Phil. 382; 523 SCRA 405 (2007) [Per J. Garcia, First Division].
615
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....
In the absence of a clear legal right, the issuance of the
injunctive writ constitutes grave abuse of discretion. As the
Court had the occasion to state in Olalia v. Hizon . . . :
616
Thus, an injunction must fail where there is no clear
showing of both an actual right to be protected and its
threatened violation, which calls for the issuance of an
injunction.
The Corporation Code provides that a stockholder has
the right to inspect the records of all business transactions
of the corporation and the minutes of any meeting at
reasonable hours on business days. The stockholder may
demand in writing for a copy of excerpts from these records
or minutes, at his or her expense:
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617
Title VIII
Corporate Books and Records
SECTION 74. Books to be Kept; Stock Transfer Agent.—
Every corporation shall, at its principal office, keep and carefully
preserve a record of all business transactions, and minutes of all
meetings of stockholders or members, or of the board of directors
or trustees, in which shall be set forth in detail the time and place
of holding the meeting, how authorized, the notice given, whether
the meeting was regular or special, if special its object, those
present and absent, and every act done or ordered done at the
meeting. Upon the demand of any director, trustee, stockholder or
member, the time when any director, trustee, stockholder or
member entered or left the meeting must be noted in the minutes;
and on a similar demand, the yeas and nays must be taken on any
motion or proposition, and a record thereof carefully made. The
protest of any director, trustee, stockholder or member on any
action or proposed action must be recorded in full on his demand.
The records of all business transactions of the corporation and
the minutes of any meetings shall be open to the inspection of any
director, trustee, stockholder or member of the corporation at
reasonable hours on business days and he may demand, in
writing, for a copy of excerpts from said records or minutes, at his
expense.
Any officer or agent of the corporation who shall refuse to allow
any director, trustee, stockholder or member of the corporation to
examine and copy excerpts from its records or minutes, in
accordance with the provisions of this Code, shall be liable to such
director, trustee, stockholder or member for damages, and in
addition, shall be guilty of an offense which shall be punishable
under Section 144 of this Code: Provided, That if such refusal is
pursuant to a resolution or order of the Board of Directors or
Trustees, the liability under this section for such action shall be
imposed upon the directors or trustees who voted for such refusal:
and Provided, further, That it shall be a defense to any action
under this
618
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The right to inspect under Section 74 of the Corporation
Code is subject to certain limitations. However, these
limitations are expressly provided as defenses in actions
filed under Section 74. Thus, this Court has held that a
corporation’s objections to the right to inspect must be
raised as a defense:
Gokongwei, Jr. v. Securities and Exchange
56
Commission stresses that “impropriety of purpose . . .
must be set up the [sic] corporation defensively”:
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619
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620
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Terelay Investment and Development Corp. v. Yulo58 has
held that although the corporation may deny a
stockholder’s request to inspect corporate records, the
corporation must show that the purpose of the shareholder
is improper by way of defense:
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621
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622
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Among the actions that may be filed is an action for
specific performance, damages, petition for mandamus, or
for violation of Section 74, in relation to Section 144 of the
Corporation Code, which provides:
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623
In this case, petitioner invokes its right to raise the
limitations provided under Section 74 of the Corporation
Code. However, petitioner provides scant legal basis to
claim this right because it does not raise the limitations as
a matter of defense. As properly appreciated by the Court
of Appeals:
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Petitioner insists that the Court of Appeals erred in
relying on Section 74 of the Corporation Code. It claims
that jurisprudence allows the corporation to prevent a
stockholder from inspecting records containing confidential
information.61 Petitioner cites W.G. Philpotts v. Philippine
Manufacturing Company:62
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60 Rollo, p. 14.
61 Id., at p. 549.
62 40 Phil. 471 (1919) [Per J. Street, En Banc].
624
In order that the rule above stated may not be taken in too
sweeping a sense, we deem it advisable to say that there are some
things which a corporation may undoubtedly keep secret,
notwithstanding the right of inspection given by law to the
stockholder; as, for instance, where a corporation engaged in the
business of manufacture, has acquired a formula or process, not
generally known, which has proved of utility to it in the
manufacture of its products. It is not our intention to declare that
the authorities of the corporation, and more particularly the
Board of Directors, might not adopt measures for the protection of
such process from publicity.63
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625
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626
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627
II
The Court of Appeals did not commit an error of law in
disregarding the procedure on dissolution of injunctive
writs. It lifted and cancelled the injunction via a petition
for certiorari under Rule 65 of the Rules of Court based on
the grave abuse of discretion on the part of the Regional
Trial Court in issuing the writ of preliminary injunction.
Petitioner invokes Rule 58, Section 6 of the Rules of
Court, which provides:
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Petitioner assails respondents’ failure to submit any
affidavit or counterbond pertaining to irreparable damage
and compensation of damages that may be suffered if the
injunction is dissolved.66
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66 Rollo, p. 563.
628
Petition denied.
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67 Id., at p. 91.
** Designated additional member per Raffle dated October 3, 2016.
*** Designated additional member per Raffle dated November 12, 2014.
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